CARGOTEC CORPORATION, STOCK EXCHANGE RELEASE, 18 JUNE 2014 AT 2 PM (EEST)
Cargotec adjusts previous estimate on project cost overruns in Kalmar
Cargotec adjusts previous estimate on project cost overruns in Kalmar business area. In connection with the first quarter interim report, Cargotec stated that the majority of sales of the large projects sold in 2011-2012 have been recognised as revenue. In the same context, it was stated that significant cost overruns related to one ship-to-shore crane project sold in 2012 were found. In an analysis conducted thereafter in this specific project, it has become evident, that this project will result in a higher than expected cost overrun for Kalmar in order to deliver the project.
Cargotec will book approximately EUR 40 million in project cost overruns in Kalmar's second quarter operating profit, in addition to EUR 9 million booked in the first quarter. This is estimated to cover the costs for finalising project deliveries.
President of Kalmar Olli Isotalo will take over the operative responsibility of the Automation & Projects division responsible for project sales and delivery besides his current responsibilities. Processes and related controls of the division will be further strengthened. Management of the above-mentioned ship-to-shore crane project has been replaced and resourcing strengthened, and tightened internal controls have been introduced in order to secure project delivery according to plan. In addition, cooperation negotiations have been started to reorganise the ship-to-shore crane business.
At the same time, the on-going profitability improvement programme in Kalmar, targeting EUR 40 million run-rate improvement by the end of this year, is proceeding according to plan.
Outlook for 2014 unchanged
Despite cost overruns in Kalmar's projects, Cargotec's outlook for 2014 is unchanged. Cargotec's 2014 sales are expected to grow from 2013. Operating profit excluding restructuring costs for 2014 is expected to improve from 2013.
For further information, please contact:
Olli Isotalo, President, Kalmar, tel. +358 20 777 4111
Eeva Sipilä, Executive Vice President, CFO, tel. +358 20 777 4104
Anne Westersund, Senior Vice President, Communications and Public Affairs, tel. +358 20 777 4460
Paula Liimatta, Director, Investor Relations, tel. +358 20 777 4084
Cargotec shapes the cargo handling industry for the benefit of its customers and shareholders. Cargotec's business areas MacGregor, Kalmar and Hiab are recognised leaders in cargo and load handling solutions around the world. Their global network is positioned close to customers and offers extensive services that ensure a continuous, reliable and sustainable performance according to customers' needs. Cargotec's sales totalled approximately EUR 3.2 billion in 2013 and it employs approximately 11,000 people. Cargotec's class B shares are quoted on NASDAQ OMX Helsinki under symbol CGCBV. www.cargotec.com